1. Technical Field
This invention relates generally to private equity and debt markets, and more particularly to managing, tracking, distributing and syndicating resource consumers' account, company, and relationship information in such markets.
2. Discussion of Prior Art
In the equity and debt funding business a “resource provider” (provider) is a party, who may be a venture capitalist, a bank, an accounting firm, advisor or Board member, a law firm or other business partner, that provides capital, assets or services. A “resource consumer” (consumer) is a party, typically an emerging growth company, that is seeking these resources. Resource providers and consumers agree what information the consumers are to deliver in exchange for being considered to receive resources from the providers. However, the formatting of information and the delivery mechanisms are not standardized. Currently, consumers may deliver information via ground mail, e-mail, online forms, FAX, teletext, etc. Current methods and processes typically require duplicative and costly data entry by both providers and consumers. To homogenize data, providers currently must collect, re-enter, and format data submitted by consumers. The problem is illustrated in FIG. 1. Consumers often receive resources from multiple providers. Consumers receiving duplicative information requests from different resource providers must duplicate their efforts of producing and delivering the same information to the different resource providers. Current methods do not allow an individual consumer to use a single platform and/or user interface to efficiently distribute and/or syndicate the same digital information and updates to multiple providers.
Despite growing demand for more digital information, attempts to automate the digital distribution and syndication of consumer information have fallen short. This is largely because individual software or system deployments by providers currently require consumers to re-enter and/or resubmit their same data into multiple stand-alone systems that do not share information. This means additional time-consuming and expensive work for consumers who do not have sufficient resources to enter and re-enter the same data multiple times in order to satisfy the providers. It is currently difficult to retrieve, share, distribute and/or syndicate current or previous versions of consumer information among providers because: 1) the desired data may not be available in digital format; 2) the data is not semi-homogeneous; 3) providers often have additional and special information requests; 4) no common platform is available upon which to submit, track, manage, and retrieve successive versions of submitted data; and 5) there exists no independent, neutral third party administrator to regulate and control interested parties' access to, and sharing of, data submitted by consumers. Because the submission of data on multiple systems is time and labor intensive, many consumers refuse to submit their data electronically using each provider's separate platform. Thus, there is a growing need to obtain more semi-homogeneous and digital data directly from consumers.
Conventional methods of obtaining and managing original and revised versions of consumer data include: paper files and binders; microfilm, external research; proprietary information databases or exchanges (e.g., M&A transactions, IPO data, deal listings, Lotus Notes, etc.); portals (e.g., MSN, Yahoo); collaboration tools (e.g., file sharing services, chat boards); secure file transfer and management services; virtual data rooms; work flow products; contact management platforms (e.g., Outlook, Onyx); customer and sales force relationship management tools; and large back-end systems (e.g., SAP, Peoplesoft). These methods do not provide sufficient functionality or controls to adequately and efficiently capture, track and manage the submissions of and changes to data made by providers and consumers. Conventional solutions have not allowed providers and other interested parties to efficiently organize and track specific groups of profiles in real-time. Resource providers need to be able to see and understand how an associated resource consumer's data has changed over time. Providers are often mobile and when they travel do not have access to previous paper versions of information submitted by their fiduciary relationships. Additionally, Providers often operate under tight time constraints requiring rapid decisions and as such do not have the time to compare one version of consumer data to another.
Public equity and debt market needs are addressed by services such as Edgar, Hoovers, Bloomberg, and Yahoo, whose on-line sites post information for retrieval, sometimes for a fee, through web browsers. However, these public market solutions do not address business processes by which private equity firms and debt providers manage and control consumer information on a relationship-by-relationship basis. For example, these solutions do not align data collection and management responsibilities in an efficient and auditable manner. In short, there is not a comparable “private” equity or debt marketplace solution to capture, collect, organize, maintain, monitor, and control access to information flowing into a provider organization.
Instead, previous solutions often contain secondary data resulting from efforts of individuals who research and collect information on a company (aka consumer), e.g., Venture Source. For providers, secondary data is not reliable for evaluating or managing the performance of prospect and/or portfolio of relationships.
There is also a growing demand for stricter controls over the tracking, monitoring and oversight of submitted data and changes made to data. Companies, investment mangers, plan sponsors, investors, board members, advisors, banks, venture capitalists, and fiduciaries of all types are under increasing pressure to demonstrate that they are actively tracking and monitoring their fiduciary relationships, at the risk of being liable to criminal and civil penalties. The Sarbanes-Oxley Act and other acts require greater levels of fiduciary oversight for alternative asset classes, e.g., venture capital, hedge funds, private equity, etc. ERISA standards require managers to demonstrate adequate fiduciary oversight of capital deployed in private equity investment vehicles. In addition, the SEC is evaluating new tracking and governance legislation for venture capital, private equity, and related firms. Proposed SEC rules intended to facilitate the institutionalization of the private equity and venture capital processes through record keeping and maintenance could create administrative challenges and increase costs.
Compounding these problems, providers must adequately oversee and track the progress of their fiduciary relationships with both reduced budgets and resources. The Private Equity Industry Guidelines Group (PEIGG) noted that general partner firms, i.e. providers, often have small investment management staffs available.
There is therefore a need for a more automated system which will help providers collect, input, manage, track and syndicate authorized consumer data, to exercise greater levels of due diligence on prospective and existing portfolio companies, and to do so with fewer management dollars.